You’re starting to see it happen every day. You visit the grocery store and realize that bacon costs $1 higher than it did last week. You pull up to the gas pumps and see that it’s $.30 a gallon more than it was the other day. This has happened at least 10 times this year and the price of gas is really expensive right now.
Something has to give.
I can’t tell you that inflation is going to disappear in the near future. Why? I do not own a crystal ball.
But I can tell you this. Investing in gold is one of the best ways to hedge your bets against inflation. It’s a major reason why so many people are willing to buy a gold IRA.
And we’re just getting started. Improving your chances of minimizing inflationary damage is only one big advantage of gold IRA ownership. I’d like to tell you about some of the other major reasons to consider this investment opportunity.
A Quick Rundown of the Advantages of a Precious Metals IRA
- True portfolio diversification
- Gold’s track record during tough economic times
- Paper asset protection
- Total control over your investments
- Huge tax benefits
Need I say more? Actually, that’s exactly what I’m going to do because I’d like to break down these benefits even further.
Before I begin, consider opening a gold IRA sooner rather than later. Learn about the top 10 best gold companies in the industry by reading my detailed review.
Reason #1: Experience True Portfolio Diversification
Most investors believe they’ve achieved portfolio diversification by buying stocks in different sectors. They think this represents enough diversity to protect their portfolio. Unfortunately, these future retirees learn about the realities of diversification the hard way all too often.
Let’s take a look at the stock market crash in 2008 as a prime example. During that time, the entire stock market got crushed to put it bluntly. The Dow Jones went from around 14,000 and traded less than 7,000 in a matter of months.
Guess what else happened?
Future retirees lost their shirts. Suddenly, a $300,000 retirement portfolio was only worth $150,000! Many people tried to find work in one of the worst economic environments that we’ve experienced since the Great Depression.
And as you can imagine, older people without college degrees didn’t fare too well. They were vying for jobs against young professionals with MBAs, master’s degrees, and PhD’s that were fresh out of college.
Even worse was the fact that nobody was hiring.
There was a silver lining to this dark cloud for certain intelligent investors that mastered the art of true portfolio diversification.
During this same time frame, the value of gold went through the roof! It was the only safe haven investment in existence at the time. Things have changed and cryptocurrencies are also a safe haven now. But back then gold was the only place to park your money.
And it was absolutely worth it.
The value of gold skyrocketed from around $700 an ounce up to nearly $2000 an ounce. It stayed there until it eventually pulled back to around $1500 an ounce.
Gold investors didn’t have to come out of retirement. They were protected by this immensely successful investment.
Are you ready to begin investing in a gold IRA? Learn about the top gold IRA companies by reading my full review of my top 10 picks.
Reason #2: Gold Has an Amazing Track Record During Tough Times
I already alluded to this earlier but it definitely deserves a bigger explanation. So, I’m going to share another more recent example with you.
In February 2020, the world was suddenly a very different place. And investors on the stock market knew that the economy was entering into a forced recession.
What happened at this time?
From early February 2020 to mid-March 2020, the financial markets took a complete nosedive. In many instances the markets dropped anywhere from 35%-50%, and certain individual stocks lost so much more money.
Here’s a scary thought:
On February 25, 2020, the S&P 500 began a two-day selloff that resulted in a loss of $1.737 trillion.
This was only part of the total money lost during this crazy and unexpected time that nobody was prepared for. And it wasn’t as bad as the Great Depression, but it was financially devastating for many retirees.
Do you know what else happened during this time? From a February 4, 2020 to March 7, 2020, the value of gold increased by $160 an ounce.
As usual, gold became a safe haven opportunity for rightfully scared investors. They began storing their wealth in this valuable commodity because it has 5000 years’ worth of longevity backing it up.
Find out about the top 10 gold IRA companies by visiting this page.
Reason #3: Precious Metals Deliver Lasting Paper Asset Protection
Many people decide to buy gold IRA because they need to take advantage of the paper asset protection. This protection is needed because when inflation rears its ugly head, some popular paper assets become vulnerable.
As an example, many of the vulnerable types of investments include the following: real estate, ETFs, stocks, bonds, mutual funds, index funds, and others.
Every investment mentioned above is considered a paper asset. As we know, when the economy suffers a downturn, inflation tends to be a big part of the problem. These investments typically decrease in value during uncertain economic times.
What about the value of gold and other precious metals?
You’ve learned time and again that the value of gold and other precious metals increases during economic hardships. It was proven in 2008 and 2009 during the housing and financial market crash. It was proven again in 2020 when the market crashed because of the virus that shall not be named.
I don’t know about you, but I always take steps to protect my paper assets from unwanted or unexpected downturns. And the best way to accomplish this task is by investing in gold, silver, platinum, and palladium.
In my opinion, this investment is only worth wild if you buy a gold IRA. Learn about the top 10 gold IRA companies by reading my roundup review.
Reason #4: Have Complete Control over Your Investments
Are you tired of your account manager making foolish or unnecessary investments on your behalf? Are you frustrated when you look at your account statements and realize that you have zero control of your investments?
For some reason, foolish people believe that their account manager or mutual fund representative has their best interest at heart. They may not be out to get you per se, but they really don’t care if you fail or succeed.
Guess what? The only one to truly care about your success is you and maybe your closest family members. But that’s about it. So, it’s time to take complete control over your investments. It’s time to take your power back, so you can invest on your own terms.
I don’t know about you, but I see the writing on the wall and it doesn’t look good. Inflation is going through the roof. Gas prices are more expensive now than they’ve been since the crash in 2008. And the housing market is skyrocketing beyond our control.
In some cases, this is a good thing. But for the most part, this is a sign that the economy has gotten off kilter. It’s also a sign that you need to begin investing in gold and other precious metals. And the best way to accomplish this is to buy a gold IRA. You’ll finally take complete control of your investment portfolio once and for all.
Reason #5: Experience Massive Tax Benefits like Never Before
Did you know that self-directed IRA account holders get exciting tax benefits? The IRS makes it possible to build your wealth for retirement in tax-free or tax-deferred accounts. You’ll have to decide which account makes the most sense to meet your personal needs.
As an example, if you were to open a traditional self-directed IRA account, you’d have the opportunity to get tax deferred benefits. This means you’ll lower your annual gross income by the amount deposited into your IRA account. And you aren’t responsible to pay taxes on this income until you begin taking distributions during retirement.
If you’re wondering, the earliest age to begin taking distributions is 59 ½ years old. If you take a distribution earlier, you’re subject to a 10% early withdrawal penalty. You’ll also have to pay your taxes the next time you file.
Opening a Roth self-directed IRA leads to tax-free investing. You fund a Roth IRA with money that was already taxed by the IRS. So, all the proceeds in this account are yours to keep.
I hope you truly see the value of these amazing benefits. By now, you should be thoroughly convinced that it’s in your best interest to buy a gold IRA. Otherwise, your portfolio will end up suffering at some point because of a lack of diversity and protection.
To get started on your precious metals IRA journey, please learn about the top companies in the gold investing space. Read my top 10 review of the best gold IRA companies in business right now before you get started.
I appreciate this information as the timing is good. I am preparing to do a rollover from an account with my former employer. Based on the inflation scenario you have provided sound advice with these options. I will discuss precious metals IRAs with my fiduciary investment advisor to get his current take on it and then make an informed decision. I have saved your article for future reference. I also like the tax benefits involved.
Hello Joseph! Thank you for your input. I am glad that you are considering investing in precious metals. It is definitely worth talking to your investment advisor about. I hope he gets involved himself, too. Thank you for the feedback and please let me know how it works out for you!
Is this real gold? If so then I am sure that it is very expensive. It is also another source of income. I am always looking for ways to make money online, so if this is one of them then I will definitely look into getting into it. Thank you for such an informative article. It is well written and I will definitely share it with friends and family.
Hello Daniel! Yes, this is not only real gold, but IRA-approved gold that the IRS permits in this specific self-directed retirement account. You can learn about the IRA fees in the my main page (top 10 gold IRA companies) but when you work with the best companies, you don’t even pay the first year’s fees and it’s not even a few hundred dollars a year after the first year but it’s not even a problem because you will get back 5-10% back in free precious metals or $10,000 worth of free precious metals depending on how much you have invested. Of course, this option is for the more wealthy. You get 5% back in free metals if you invest $50k to $99,999 and 10% back if you invest $100k+ with our #1 company, and $10,000 back in free metals if you invest $50k or more with our second best company. So, yes if you do have the funds to invest in this retirement vehicle, I would suggest you do so, but be also aware that this is for people who are over 55 years old and in the US. You can invest in physical gold in different ways in different countries. But if you do share this with the people who meet the requirements that would be great! Thank you for your input and feedback, Daniel and again I thank you for sharing this with friends and family.
While I agree that holding some gold as part of your retirement portfolio is a good thing and gold does do very well in times of rapid inflation, but it is not as good of investment in normal times compared to stocks, or real estate. You state this in the article and you really gave it a balanced approach and I appreciate that. I just think it’s important for people to understand that if you move everything or even most of your portfolio in gold your shortchanging yourself.
Hey Mike, you pointed something out that is good and yes, which I have already stated. Gold just remains as a hedge against economic and financial disasters but it does not usually give you the short-term gains you can have by trading and such. This is why investors tend to invest in gold as a “safe-haven” asset. Meaning that you don’t invest to try to make super astronomical gains but rather so that you don’t lose the value of your money as you would if you just held it in fiat currency form like the US dollar which decreases in value all the time because of the Fed printing more and more money (and these pandemics are just making it worse). That’s really the best reason to invest in gold. Gold tends to go up in times of economic disasters while the stock market has the exact opposite thing and make a nosedive in value during those times. This is why it’s good to have a balanced portfolio as you said. Thank you for the input and feedback, Mike!
Several points have made me incline the balance towards investing in a Gold IRA. But the key one is that we have total control over our investment. Inflation will hit us hard in the following years. And I was initially drawn towards investing in cryptos. But after some serious thought, I decided to go a more traditional route with gold IRAs.
Hi Abel! Actually a balanced portfolio that includes both crypto and gold would be the best. The best gold IRA companies also offer crypto IRAs. This is something to look into! Thanks for the feedback, Mike. Let me know how it goes with your investment journey!
Hi David, Gold has a way of going against the economy. Gold broke its record, surpassing $2000 in value. There’s a big chance of its value to rise again, especially when the dollar and its value change consistently.
Buying gold and investing in precious metals is a great investment and it can bring relief and peace of mind because you can see and touch it, and you know it has a physical body.
Gold and precious metals provide inflation protection and additional purchasing power. Gold IRA companies are making it simple to open and fund our precious metals IRA but we need to thoroughly read through everything. They explain everything we need to know before opening an account with a gold IRA company.
In my opinion, the benefits of investing in gold and other precious metals are numerous. It goes without saying that having a varied investment portfolio is a great way of reducing risk.
Hello Bushra! Wow, I agree with everything you said! Thank you for your feedback and I hope you the best on your investment journey!